Ellies disaster – From R10 to 10c in 10 years

Ellies’ share price declined by 99% over the last decade, making it one of the worst performers on the Johannesburg Stock Exchange (JSE).

Ellies was founded by Ellie Salkow in 1979 in Johannesburg with five employees, selling only television aerials.

The company expanded rapidly and opened branches in Cape Town, Durban, Port Elizabeth, Windhoek, Polokwane, Gaborone, Nelspruit, East London, and Bloemfontein.

Ellies broadened its product range in the nineties to include remote controls and various other accessories.

In 1995, the company founded Elsat with the advent of satellite TV in the South African market.

In the 2000s, Ellies and Elsat became household brands and continued to expand the product range to include audio, telephone accessories, and domestic electrical products.

The next decade saw it adding renewable energy products, backup power, and other products to its portfolio.

Ellies was listed on the JSE’s Alternative Exchange (AltX) in 2007. It issued its maiden dividend in 2010 and moves to the JSE’s main board in 2010.

The company became a firm favourite among investors and hist an all-time high share price of over R9.50 per share in May 2013.

There was tremendous excitement about its involvement in providing set-top boxes in partnership with Altech EUC as part of the digital terrestrial television (DTT) roll-out.

However, as the government started to fumble the DTT migration, so did the interest in Ellies and its prospects.

The share price declined by 80% between 2013 and 2014, and the company continued to lose value as it searched for new revenue streams.

By 2019 it was trading at 10c per share – a level which persists to this day despite a short-lived jump 18 months ago on the back of a new BEE deal with the Imvula Education Empowerment Fund Trust.

More recently, Ellies announced a plan to buy Bundu Power for a maximum consideration of R202.6 million to strengthen its presence in the alternative energy market.

Bundu Power was founded in 2005 and specialises in the distribution and rental of generators and the distribution and installation of solar and ancillary products.

With a market cap well below R100 million and ambitions of growing its alternative energy market share, many investors wonder if it is worth a nibble.

Speaking on Business Day TV, Wayne Mccurrie from FNB Wealth & Investments said he would not invest in Ellies.

“It was listed with great fanfare and did extremely well in the early years, but I would not consider it now,” he said.

David Shapiro from Sasfin Securities is also not bullish about Ellies, saying they should have never listed on the JSE.

“The CFO was a good friend of mine, and I urged him not to go public. They were a really good trading company. They never had the character to go public,” he said.

Ellies share price

The chart below shows Ellies’ share price since the company was listed in 2007.